Nothing Has Changed - that's the problem.
Another ugly day (4th in a row) for the MSOS Cannabis ETF, which is now down 19% over the past month versus the S&P 500 down 2.1% as investors begin to understand federal politics better? No, the problem is nothing politically has changed in the last month. The expectation is for a change in DC, and progress is stalled against higher priorities. Curaleaf reports AMC today, and AYR Wellness reports on Thursday. The politicians in Washington will get to Cannabis policy, but we are looking to the Spring now for better news flow; in the meantime, earnings and new jurisdictions will be top of mind.
Mexico moves closer to legalizing cannabis (CGC)
Two special committees of Mexico's Lower House of Congress approved a draft bill to decriminalize marijuana. The bill now heads to the full chamber. The bill is supported by President Andres Manuel Lopez Obrador. His party has a majority in both chambers of Congress. If approved by the full chamber, it would create one of the largest legal markets for cannabis. Several companies have expressed interest in entering the Mexican market, including Canopy Growth and The Green Organic Dutchman.
With daily sales averaging $2.8 million in January 2021, the Massachusetts adult-use market is now worth $1 billion annually, which is certainly correlated with the spike in the number of retail locations from 33 in December 2019 to 94 by December 2020. Sales benefited from a holiday shopping boost and have sustained that momentum at around $30k per day per store well into 2021. Despite changing buyer behavior, such as steep declines in daily sales on Thursdays and Fridays attributed in part to the pandemic and disrupted commuting routines, overall numbers remain strong with more than $1.26 billion worth of cannabis products sold through the adult-use market between November 2018 and February 2021.
Massachusettes Sales Update
When AYR reports on Thursday, they will be talking about strong numbers in their core Massachusetts market. The Massachusetts market broke a new sales record in December (during the holiday) 2020 and January 2021, with January sales jumping to $87.5 million, up from 68% last year. February is also showing sustained momentum. Based on these numbers, annualized sales now top $1 billion and counting.
